You have probably heard of Bitcoin and how it is generating new wealth by the day, thanks to its ever-increasing prices. In the last 10 months alone, Bitcoin has moved by more than 600% surging to its current valuations of over $7,000. But even as prices soar, some experts think that Bitcoin is reminiscent of the dot-com bubble.
Some even think it’s very close to the 1600s tulip mania. But that may not be the case, going by Bitcoin’s inherent value. In fact, there is a chance that Bitcoin could still surge to above $100k in the next decade. Don’t believe it? Let’s look at 4 reasons why Bitcoin is not a bubble and could rise even further in the future.
Bitcoin is going to stay here for a long time
1. Bitcoin is growing in acceptance
If Bitcoin were a bubble, it would operate on the peripheries of finance with no real value attached to it, other than speculation. But that is not the case. Nations are beginning to accept Bitcoin as a mode of transaction. Major nations like Japan, Australia and Russia are leading the way in accepting Bitcoin as legal tender. As more nations accept Bitcoin as a legal mode of payment, its value will soar to greater heights, dispelling any fears of a bubble.
2. Bitcoin now acts as a store of value in troubled economies
A few years ago, Zimbabwe’s currency became worthless as inflation hit 9 digits. This meant that anyone with assets in Zimbabwe was pretty much poor. But Bitcoin has changed that. People in Zimbabwe are now using Bitcoin not just as a store of value, but also as a transaction medium. Many other troubled economies like Venezuela and Bolivia have taken this route too. This is a strong intrinsic value of Bitcoin that may even grow in case the world is hit by another financial crisis. On this basis alone, chances of Bitcoin’s value evaporating like many internet ideas in the dot-com bubble are minimal. In fact, all it will take is another global recession and Bitcoin will hit valuations that were unimaginable before.
3. Bitcoin’s supply is capped
When demand is higher than the supply of a commodity, prices rise. That’s economics 101, and it’s not about to change with Bitcoin. As it stands, Bitcoin’s demand is high, and it will continue to rise as more people start using it as both a transactional currency and as a store of value. This demand is pegged on a capped supply of only 21 million bitcoins. On top of that, it is now more difficult to mine bitcoin, which means it will become rarer over the years. On this basis alone, the value of Bitcoin will continue to grow over the years. This alone dispels any fears that Bitcoin is a bubble.
4. There is a growing merchant adoption of Bitcoin
In the last few years, Bitcoin was mainly used by techies and a few early adopter merchants. However, this has changed this year. There are now many companies out there that accept Bitcoin as a mode of payment. For instance, Microsoft, one of the largest corporations in the world now accepts Bitcoin as a mode of payment. This will most likely become the norm in a few years, and as it happens, Bitcoin’s value will only grow. This is not a characteristic that’s attributable to a bubble.